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Day Trading Company Accounts

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Hello,

I have been approached by a company that trains people in day trading and this is a business area I am unfamiliar with. There is a point of confusion arising around the funds transferred to their trading platform (IG)

The monies transferred to IG are there to show others how day trading works and how to get out of bad trades, as such the account will always be losing value and is essentially a training expense. 

My understanding was that the IG account should be on the balance sheet as an asset and the losses treated as an expense as each day trades are closed, i.e no long-term investments so no CGT.

However, I have been led to believe that the monies transferred should be treated as a training expense infull and once the funds are transferred back to the companies bank account, this should be recognised as income. Am I wrong in thinking this is incorrect? It seems a way to servery lower the tax liability if the transfers out are treated as an expense.

Any advice or points of contact would be much appreciated.

James

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By johngroganjga
07th Aug 2020 14:30

You are right. The cash transferred out is still an asset of the company, not an expense.

What is an expense is any losses suffered on the trading activity.

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